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The resale price maintenance is a vertical restriction through which the producers fix a price to be adopted by the retailers, in order to avoid competition between their products in the downstream market.
In the past, the practice was considered anticompetitive per se by the American Courts, since it has the potential effect of restraining competition between products of the same brand and could facilitate cartel formation, working as a mechanism to monitor prices. However, methods of rigorous economic analysis introduced by the Chicago School demonstrated that this practice could generate efficiencies previously not identified by the Courts, which would justify a case-by-case analysis in order to assess the effects on competition (through the rule of reason). According to the new theories, the resale price maintenance could increase sales effort of the retailers and avoid the problem of the free riding.
In Brazil, the practice is described by the article 21, item XI, of the Law no. 8,884/1994 (“Antitrust Law”) and can be punished if it produces some of the effects set forth by article 20. The Administrative Council for Economic Defense (“CADE”) addressed the resale maintenance price a few times recently, but there is not a solid case law on the subject yet. However, two cases currently under analysis of the agency may demonstrate what will be CADE’s interpretation over the effects of this practice on competition .
There are many questions regarding the acceptability of the practice under the Antitrust Law. Besides the effects commonly associated to the resale price maintenance – mentioned above – it is important to question if the existence of market power is necessary in order to consider the practice unlawful. Another question is related to the limits between the resale price suggestion and the resale price maintenance. CADE’s case law indicates that the suggestion can not negatively affect the market . However, it is important to establish criteria to differentiate the suggestion from the maintenance of resale price, for example: to determine if the existence of internal mechanism of penalty for the case of noncompliance by the retailer with the producer’s rules is necessary to imply in the wrongfulness of the practice and what kind of penalty should it be.
To answer these questions, the methodology used will be the analysis of the economic effects of the resale price maintenance and study of the interpretation given by foreign jurisdictions. In this context, the development of the American case law and theory – as well as the opposition between the per se conception and the new ideas introduced by the Chicago School related to the rigorous economic analysis of vertical restrictions – are specially relevant.
Therefore, this paper aims to assess how the resale price maintenance should be examined based on the Antitrust Law provisions, considering the experience of the foreign law, the study of the cases currently under analysis of the Brazilian antitrust authorities and CADE’s case law on the subject.
